Nov 8, 2021 · 1h 19m · how-i-built-this
Back to the Roots: Nikhil Arora and Alejandro Velez
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of 'How I Built This,' co-founders Nikhil Arora and Alejandro Velez share how an undergraduate curiosity about growing mushrooms on spent coffee grounds evolved into Back to the Roots, a leading nationwide organic home gardening brand. They recount the pivotal business shifts, manufacturing crises, and persistent retail pitches that transformed an experimental urban farming venture into a major consumer enterprise.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 34.2% of the talking time here. How this is scored →
Guy as informed peer 3.3 Guest teaching 3.7 Guest disagreement 0.1 Guy pushing back 0.9
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 57:19 Alejandro defending retail market potential against Guy's skepticism
When Guy suggests grow kits could never support a viable large business, Alejandro cheerfully embraces the harsh critique and counters with market expansion figures.
Hardest push from Guy ▶ 57:00 Guy Raz challenging the business ceiling of mushroom kitsGuy directly confronts the founders, stating he could not imagine seeing a viable standalone business in home mushroom kits.
Biggest teaching moment ▶ 37:01 Nikhil explaining mycorrhizae and soil biologyNikhil provides a clear, scientific breakdown of how mycorrhizae roots unlock native soil nutrients for plants.
Guy holds their own ▶ 57:50 Guy calculating retail revenue caps in Whole FoodsGuy demonstrates strong industry knowledge by mathematically modeling store counts and product turns to show the ceiling of selling strictly through Whole Foods.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| The Value of Abandoned Ideas and Company Overview | 0 | 0 | 0 | 0 | Host Guy Raz provides an introductory solo monologue framing the company's trajectory and themes of abandoned ideas. Because this is a monologue, host and guest scores are zero. | |
| Alejandro Velez on Childhood in Colombia and Cancer Survival | 3 | 3 | 0 | 0 | Alejandro Velez shares emotional childhood memories of surviving the Colombian conflict and battling cancer in Michigan. Guy Raz asks empathetic, guiding biographical questions in an agreeable tone. | |
| Nikhil Arora on Upbringing and Immigrant Values | 2 | 3 | 0 | 0 | Nikhil Arora describes his immigrant family background and initial spark of interest in sustainable agriculture during a UC Berkeley lecture. The exchange is deeply collaborative. | |
| Meeting at the Fraternity and YouTube Mycology Research | 2 | 5 | 0 | 0 | The co-founders describe their initial meeting and research on mycology. Nikhil educates Guy on how coffee grounds' cellulose structure mimics tree logs used for oyster mushroom substrates. | |
| Developing the Triple-Revenue Business Model | 3 | 4 | 0 | 0 | Alejandro and Nikhil outline their triple-revenue business model and reaching out to Paul Stamets. Guy Raz follows along and asks clarifying questions regarding spawn and coffee collection. | |
| The Fraternity Closet Harvest and Alice Waters Taste Test | 3 | 4 | 0 | 0 | Nikhil recounts growing their first crop in a fraternity closet and taking the bucket to Chez Panisse for Alice Waters and her chef to taste. Guy engages smoothly with supportive interest. | |
| Pitching Berkeley Whole Foods and Connecting with Randy DeCommon | 3 | 3 | 0 | 0 | The guests recount pitching the Berkeley Whole Foods and their initial memorable phone conversation with regional produce buyer Randy DeCommon. | |
| Big Ideas Competition and Turning Down Corporate Careers | 4 | 2 | 1 | 3 | Guy lightly pushes back on the rationality of turning down lucrative Wall Street and consulting offers to pursue an unlikely mushroom business, noting that friends giving warnings had a good point. | |
| Setting Up the Oakland Warehouse and Cultivation Chambers | 3 | 5 | 0 | 0 | Alejandro explains the biological mechanics of mushroom fruiting chambers, educating the host on inducing stress to trigger growth, alongside their makeshift warehouse setup in Oakland. | |
| First Whole Foods Delivery and Battles with Contamination | 3 | 4 | 0 | 0 | The founders describe their first modest delivery to Whole Foods and subsequent multi-month battle with trichoderma mold contamination. | |
| Mid-Episode Break and Tour Cautionary Tale Teaser | 4 | 5 | 0 | 0 | Nikhil educates Guy on mycorrhizae and spent mushroom substrate, explaining why coffee soil mixed with mycelium acts as an effective soil amendment for gardeners. | |
| Farmers Market Popularity and Whole Foods Facility Tour | 4 | 4 | 0 | 0 | The guests describe a cautionary tale of inviting Whole Foods corporate staff to their unpolished warehouse, which prompted a regulatory overhaul to bring the facility up to code. | |
| Developing Mushroom Grow Kits and Automating Operations | 4 | 4 | 0 | 2 | Guy questions whether selling grow kits would cannibalize their fresh produce sales. The founders explain that kits monetized the experience of growing rather than raw mushroom consumption. | |
| First Year Revenue and Packaging Redesign Feedback | 3 | 3 | 0 | 1 | The founders discuss hitting $250k in revenue and receiving blunt critique from Randy DeCommon regarding their unappealing initial kit packaging, forcing a design pivot. | |
| Alejandro's Unconventional Stint on The Bachelorette | 2 | 3 | 0 | 0 | A lighthearted segment where Guy explores Alejandro's brief detour appearing on The Bachelorette while Nikhil maintained operations. | |
| Strategic Crossroads: Fresh Produce vs. Packaged Kits | 4 | 4 | 0 | 1 | The co-founders explain partnering with Gourmet Mushrooms to outsource substrate manufacturing, stepping away from direct farming to focus on marketing and brand distribution. | |
| Evaluating the Ceilings of Indoor Gardening Retail | 6 | 4 | 2 | 6 | Guy challenges the commercial ceiling of indoor mushroom kits, calculating revenue caps. Alejandro and Nikhil push back by detailing their Kickstarter launch of the aquaponic Water Garden. | |
| The Water Garden Manufacturing and Pump Failure Crisis | 4 | 4 | 0 | 2 | Guy probes the financial and operational fallout of their water garden launch after an 80% pump failure rate nearly bankrupted the company. | |
| Trademark Cease-and-Desist and Amazon E-Commerce Boom | 3 | 4 | 0 | 1 | Alejandro recounts receiving a trademark cease-and-desist over the 'AquaFarm' name alongside rapid e-commerce sales growth on Amazon. | |
| Launching Organic Cereal and NYC Public School Contracts | 3 | 4 | 0 | 1 | Nikhil explains their rationale for launching a biodynamic organic cereal line and securing a massive 2,000-school contract with the NYC Public School system. | |
| Institutional Venture Capital and Channel Focus at Home Depot | 5 | 5 | 0 | 2 | Guy inquires about their transition to institutional funding and strategic identity. Alejandro explains cutting the cereal line to focus strictly on lawn and garden retail at Home Depot and Lowe's. | |
| Disrupting the Home Gardening Market and Industry Persistence | 4 | 5 | 0 | 0 | The founders detail the $20B gardening industry, millennial demographic shifts, and years of persistence pitching retail buyers at Walmart and Costco before succeeding. |
Statements from this episode (27)
Nikhil Arora: Immigrating is the ultimate form of entrepreneurship
“Even think about entrepreneurship, like, to me, immigrating is the ultimate form of that, of taking risk and sacrifice in search of something better”
Arora: Coffee Grounds Mimic Tree Cellulose for Growing Oyster Mushrooms
“The cellulose structure of coffee grounds mimics that of, you know a tree on which oyster mushrooms would traditionally grow.”
Arora: Commercial Mushrooms Are Traditionally Cultivated on Cut Virgin Tree Logs
“Traditionally, mushrooms are grown on virgin trees being cut down for their logs, mainly overseas as a substrate to grow mushrooms.”
Velez: Paul Stamets replied to founders' cold email within two hours
“We cold emailed him, and he got back to us within two hours of us cold emailing him.”
Alice Waters tasted and praised Back to the Roots' first mushroom batch
“He ends up plucking half, half of the mushrooms out of his bucket, And I remember he chops them up, sautes them up in the back of a restaurant, and she tries them, he tries them, we try them, and I remember Chef Alice Waters was like, man, these are delicious.”
Early Whole Foods stores purchased produce directly from walk-in local growers
“This was at the early days where Whole Foods, you could Do this all the time. You know, a lot of local growers would go to a Whole Foods store and on the spot, Whole Foods would buy it from you.”
Peet's Coffee paid Back to the Roots to collect their raw materials
“We ended up negotiating a rate that was a little bit cheaper than I think what they were paying waste management and so we really became valet waste collectors.”
Velez: Mushrooms fruit in response to environmental shock
“They only grow when they think they're gonna die. So you have to immediately go from a dark room to a light room. You have to go from a dry room to a really humid room. So with those shocks, mushrooms get scared, and they begin to fruit, and that takes about 1…”
Mushroom grow kits succeeded because of the experience, not the food
“The kits weren't about the mushrooms. They were about the experience of growing, and just seeing something grow, and growing something yourself.”
Back to the Roots raised over $100K in competitions and $25K Oakland grant
“We probably, what, got, Alex, a hundred-something thousand dollars from different winnings. The city of Oakland was incredible, and we ended, we moved from Emeryville to Oakland and got about a 25,000 dollar redevelopment grant from them to build out our, what…”
Back to the Roots generated $250,000 in first-year revenue
“Nick, I want to say we roughly had five people all in.
That's about right, yeah.
And we did 250,000.
In year one.
In revenue, year one.”
Founders pivoted to nationwide kits over local farming for better scale
“And it became so clear that with fresh mushrooms, we could have a local farm, sell locally, get our mushrooms into people's homes locally, or we had this other avenue in which these mushroom kits could be shipped nationwide, and it just was like, let's do the …”
Back to the Roots outsourced mushroom kit manufacturing to Gourmet Mushrooms
“What we were doing in our warehouse in Oakland of collecting the substrate, the coffee grounds, mixing of the spawn, growing the kits, packaging them. We fast forward ended up now buy those from him as a supplier to us. So they're the ones incubating all of th…”
Jony Ive replied to founders' cold email and mentored them
“We actually, funny story guy, we ended up reading the Steve Jobs biography and were super inspired by their design principles and cold emailed Johnny Ive from Apple on a Sunday afternoon, and he actually got back to us in like five minutes. And We were able to…”
Arora: Back to the Roots generated $500k in aquaponics pre-orders
“We put a 100,000 dollar goal up for 30 days, and we ended up hitting 250,000 dollars of pre-orders on Kickstarter. And another two 50 can our website in the following 30 days after close. We had almost half a million dollars of pre-orders off of like a three m…”
80% of first Kickstarter water pumps died within 30 days
“Our first pump was overheating in the unit because of the design constraints, and, you know, almost was like, 80% of the pumps, Alex, died within the first 30 days of the units going out on Kickstarter, and it was it literally put us out of business almost.”
Velez: Back to the Roots rebranded Aqua Farm to Water Garden after trademark lawsuit
“We actually got sued for calling to the aqua farm, and we had to go and beg for forgiveness, and they said, okay, fine, we won't make you discard all your packaging inventory. Just sell it out, but you need to change your name to the water garden.”
Velez: Back to the Roots' Water Garden became the top-selling aquarium on Amazon
“At this time, Amazon was really starting to explode, so we put this item on Amazon, and it became the number one selling aquarium. And stayed that way for quite some time.”
Back to the Roots was first brand with ingredients on the front
“So on our cereal actually was the first identity preserve, like a hundred percent stone ground biodynamic cereal. I actually put the ingredients, first brand put the ingredients on the front of the box.”
Velez: Back to the Roots cereal launched in 2,000 NYC public schools
“We launched an New York Public Schools, which was it was 2000 schools that started serving an organic and biodynamic cereal. It had one fifth of the sugar with three ingredients.”
Back to the Roots raised $2M from angels and $10M from Acre Ventures
“We did like a two million dollar round from angels, from angel investors. And then after that, we did the, a ten million dollar round, and that one came from Acre Ventures.”
Velez: Back to the Roots has raised $40 million in total funding
“By the time this airs, it'll be forty million.”
Back to the Roots snack line was unprofitable without vertical integration
“We had great revenue growth, really great revenue growth, but we were just not able to be profitable on the cereal and snack side at the moment. And there was no clear path unless we went and purchased our own equipment and fully vertically integrated, which w…”
Home gardening is a $20 billion market led by Scotts Miracle-Gro
“It's about twenty billion dollars, and by the way, Scott's Miracle-Gro being the category captain, they're about a twelve billion dollar market cap company.”
Back to the Roots customer average age is 29 versus industry's 59
“So the average gardener today is 59 years old. Our average gardener is 29 years old.”
Velez: Costco accepted Back to the Roots after seven years of rejections
“Guy, we presented to Costco's lawn and garden department seven years in a row and got turned down every single year. They've just announced they're launching us this coming spring spring, 20, 22, seven years later, same exact merchant as well.”